Recovery Rebate Credit

Eligible individuals are entitled to a Recovery Rebate Credit in 2020.  The government will make advance payments of the credit as soon as possible, with eligibility and credit amounts based on information from 2019 or 2018. 

The maximum credit is $1,200 for each eligible individual (so $2,400 for two eligible individuals who file a joint return), plus $500 for each qualifying child. However, the maximum credit amount is reduced (but not below zero) by five percent of the taxpayer’s AGI that exceeds:

· $150,000 for joint filers—so the $2,400 credit phases out completely at $198,000

· $112,500 for a head of household)—so the $1,200 credit phases out completely at $136,500

· $75,000 for any other taxpayer—so the $1,200 credit phases out completely at $99,000.

Eligible individuals and qualifying children must also have valid identification numbers.  The IRS will disburse the rebate payments in approximately within 3 weeks’ time.  The payments will be transmitted by direct deposits, if that information is on record.   If you did not file a return for 2018 or 2019, Social Security information will be used.

Cherina DK Hart, CPA